What "CTC" means on a South African job advert

Two people accept jobs on R420 000 cost to company. One of them banks R28 566 a month and the other banks R24 788. Nobody lied to either of them.

CTC is not your salary. Broadly, it is what your employer budgets for having you for a year, and how that budget is split up decides what actually lands in your account.

The number on the advert is not the number in your account

Cost to company is a payroll and package convention. There is no single statutory formula for it, and no South African statute requires an employer to advertise on that basis. Two employers can build the same CTC out of very different parts.

A package can hold some or all of these:

• your basic salary
• the employer's 1% UIF contribution
• the employer's contribution to a pension or provident fund
• whatever the employer puts toward your medical aid
• a car or travel allowance
• a cellphone or data allowance
• a guaranteed thirteenth cheque, if there is one
• group life and disability premiums

What lands in your account is your cash pay: the basic, plus any guaranteed allowances, commission or overtime the role carries, less your own deductions. The employer-side items are either paid to a fund on your behalf or are a cost you never see.

The employer's costs are not yours

UIF is 1% of your remuneration from you, and another 1% from your employer. Both are capped at the earnings ceiling of R17 712 a month, so the most that comes off you is R177,12 a month, and the most your employer pays is a separate R177,12. The ceiling has been at that level since 1 June 2021.

The skills development levy (SDL) is the employer's own levy of 1% of payroll. An employer does not have to register for it if its total payroll will not pass R500 000 over the next twelve months. If SDL shows on your payslip as a deduction from you, that is wrong. Under section 34(1) of the BCEA, an employer may not deduct anything from your pay unless you agree in writing to a deduction for a specified debt, or the deduction is required or permitted by a law, a collective agreement, a court order or an arbitration award.

Some employers count these employer costs inside the CTC they quote and some do not. It is a package convention, not a rule. Where the employer's UIF is inside the number, R354 a month of a R35 000 package goes to the Fund, half from you and half from your employer, and neither half reaches your account.

Why the size of your basic matters

Not every payment is worked out on the same figure. It depends on the law that governs the payment, and on your contract.

Anything your contract pegs to basic salary is smaller when basic is smaller: a bonus expressed as a month's basic, for instance, and often the "pensionable salary" your retirement contributions are calculated on. Overtime under the BCEA is paid on your wage, which the Act defines as the money paid for your ordinary hours of work, so an employer's fund contributions do not raise it.

Some statutory payouts use a wider measure. Annual leave pay, pay instead of notice and severance pay are calculated on remuneration as the Minister defined it under section 35(5) of the BCEA. Government Notice 691 of 23 May 2003 includes in that "employer's contributions to medical aid, pension, provident fund or similar schemes", along with a housing or car benefit. It excludes payments made to enable you to work, which is why a transport allowance to get you to the office does not count. How much notice you have to give in South Africa works through what that does to your last payslip when you leave.

Pension or provident is yours, not a perk

The employer's contribution is part of what it agreed to spend on you. Since 1 March 2016 it has been a taxable fringe benefit in your hands, treated as a contribution you made, and you then get a deduction for it.

For the 2027 tax year, section 11F of the Income Tax Act lets you deduct retirement fund contributions up to the lowest of:

• R430 000 a year
• 27,5% of the higher of your remuneration or your taxable income
• your taxable income

A standard employer contribution of 10% or 15% of basic sits well inside those limits, so on most packages it is deductible in full. Contributions within the limits come off your taxable income, so what they save you in tax depends on your marginal rate. It is also the part of the package you cannot spend this month.

Medical aid, and what dependants cost

Medical scheme contributions paid by your employer are also a taxable fringe benefit, and you get a fixed credit back against your tax. For the 2027 tax year SARS sets the medical scheme fees tax credit at R376 a month for the main member, R752 for the member and one dependant, and R254 for each additional dependant (SARS medical tax credit rates page, updated 25 February 2026).

That credit is a flat rand amount per person covered, not a percentage of what the scheme charges. A member with a spouse and two children gets R376 for themselves, R376 for the first dependant and R254 for each of the two children, which comes to R1 260 a month. As an illustration only: if the scheme charged R4 000 to R5 000 a month for that family, the credit would be worth about a quarter to a third of the contribution.

So check the scheme's actual rates for your family before you compare two offers. A package with medical aid inside it can leave less in your account than the cash equivalent. Whether it is worth more to you overall depends on the contribution, who is covered, what the scheme pays for and the tax.

Two R420 000 packages, side by side

Both packages are examples, not quotes from any employer. Both are R35 000 a month cost to company, and both are taxed at the 2027 rates.

Package A is all cash: basic salary, with the employer's UIF inside the number, no pension and no medical aid.

Package B carries a 10% employer pension contribution and R2 500 a month toward medical aid for the employee and one dependant, both inside the same R35 000.

That is R3 778 a month between them, on the same advert number.

Package B is not a worse offer. That person has R2 938 a month going into a retirement fund and R2 500 of medical cover, which is R5 438 of value. Person A would have to buy that out of the extra R3 778, and cannot. B also falls just under the R383 100 line where the marginal rate goes from 26% to 31%, because the pension contribution comes off taxable income first.

Just make sure you know which one you are being offered before you resign from your current job.

How the PAYE works out, at the 2027 rates

The 2027 tax year runs from 1 March 2026 to 28 February 2027. It taxes the first R245 100 of taxable income at 18%. From there to R383 100 the tax is R44 118 plus 26% of the amount above R245 100. From R383 100 to R530 200 it is R79 998 plus 31% of the amount above R383 100.

Every individual gets the primary rebate of R17 820 off the tax calculated, which is why someone under 65 pays nothing until their taxable income passes R99 000 a year. The medical scheme fees tax credit comes off after that.

Package A: R417 875 of taxable income gives R90 778 of tax. Less the R17 820 rebate, that is R72 958 a year, or R6 080 a month.

Package B: R382 613 of taxable income after the pension deduction gives R79 871. Less R17 820, and less R9 024 of medical credits for two people, that is R53 027 a year, or R4 419 a month.

Is your offer any good?

As a sanity check rather than a benchmark: Stats SA put average monthly earnings in the formal non-agricultural sector at R29 997 in February 2026, including bonuses and overtime, in the quarterly employment statistics released on 30 June 2026. It covers every formal job in the country, from a packer to a chief executive, so it is no use as a figure for your role. What it does show is how far a national average sits from what any one person is paid.

Working out a number you can defend for your own role is a different exercise, covered in what to say when they ask your salary expectations.

What to ask before you accept

A client says R35 000 CTC, a candidate says they earn R35 000, and those can be two different numbers, because the packages are built differently. That is why a careful consultant asks both sides the same question in the same words. Otherwise a candidate can reach a final interview before anyone notices that the real gap is three thousand a month in the account, not the nothing it looked like on paper.

Before you accept, ask:

• What is the basic salary, in rands, not as a percentage?
• Is the medical aid contribution inside the CTC, and how much of the scheme's premium does it cover for your family, not just for you?
• Is the pension or provident fund compulsory, at what percentage, on what pensionable salary, and who pays the risk premiums?
• Is the thirteenth cheque guaranteed or discretionary, and is it already inside the CTC figure?
• Is the travel allowance based on a logbook, and what proportion is taxed?

Each of those answers is on a payroll spreadsheet somewhere. The person making the offer may not have them to hand, so ask early and give them time, and have the breakdown in writing before you resign.

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